FinOps:

Establishing an Operating
Model for the Cloud
Manage, optimize, plan, and govern AWS usage and cost

Mike Lacarak & Sailesh Raja

Sr. Cloud Financial Management Specialists
AWS Cloud Economics

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 Agenda

Introduction

FinOps: Getting started

FinOps Framework

How we can help

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 Traditional technology consumption

Technology
teams Request Procurement
Model
Siloed procurement

Upfront estimates of cost and capacity

Rack and Approve
stack and track Long procurement cycles

High cost of failure

Operations Supply chain
Unfavorable experimentation conditions
Procure

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 Cloud technology consumption

Deploy Operate
Model
Democratized access to resources

Technology & Finance & Variable usage matches demand

Product teams Business teams

Instant procurement

Low cost of failure

Optimize
Experiment and create value

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 Cloud Financial Management
(FinOps) Framework

© 2023, Amazon Web Services, Inc. or its Affiliates. All rights reserved.
 Cloud Financial Management (FinOps)
Manage, optimize, plan, and govern AWS cost and usage

See Save Plan Run

Measurement and Cost Planning and Cloud financial

accountability optimization forecasting operations

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 FinOps benefits reported by AWS customers
FinOps adoption leads to increased capabilities across the board

See Save Plan Run

Measurement & Cost Planning & Cloud Financial
Accountability Optimization Forecasting Operations
74% increase in the rate at 38% greater savings in
35% greater savings in 35% increase in cloud
which cloud service-level ongoing cloud costs
ongoing cloud costs spend forecast accuracy
agreements (SLAs) are met

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 (See) Measurement and accountability
Understand which projects/groups/people from your company are using AWS, how much ($)

Activities Outcomes
Implement an account structure and tagging dictionary Cost and usage mapped to workloads and org structure

Establish reporting and monitoring for cost and usage Decisions made with near real-time data and costs under budget

Allocate cloud costs Cost-aware cloud consumption

Measure and circulate efficiency/value KPIs/unit metric Verifiable cloud investment decisions and outcomes

By tagging all instances in AWS, we are now able to look at specific costs from the application
layer down to every resource associated with an application. This has allowed us to surface the
hidden costs for operating applications.
Chad Marino
Executive Director of Technology Services

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 (See) Measurement and accountability
Activities Resources
AWS Control Tower – create and provision AWS accounts; govern multi-account AWS
Set up a consolidated environment
AWS account structure
AWS Organizations – holistic view of AWS accounts; simplified billing; service control policy (SCP)
and form a structured
resource tagging strategy Tagging Policy – create minimum tagging standards and enable a granular view of AWS usage
Tagging Best Practices – guide to developing and implementing a robust tagging strategy

Establish reporting and AWS Cost Explorer – reports AWS usage by service, account, groups, tags, …
monitoring for cost and
usage

Allocate cloud costs AWS Cost Categories – groups cost and usage by account, tag, service, or charge type
AWS Cost and Usage Report – metadata about AWS services, pricing, tags, cost categories, …

Billing Console – central place for all invoices and KPIs of overall spend
Measure and circulate
efficiency/value KPIs Cost Intelligence Dashboard - customizable dashboard to create cost management and
optimization tool

For summary overview, please see pages 11-15 of the AWS Cloud Financial Management Guide

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 (Save) Cost optimization

Activities Outcomes
Architect and design for value Unnecessary spend avoided as early as possible

Identify and eliminate cloud waste Wasteful spend repurposed for innovation and experimentation

Choose the best purchase option Improved unit economics

Evolve with new cloud offerings Cloud provider innovation leveraged to reduce costs

Our old platform was built and used for 6 years on “our night” of television, and never failed.
Resilience and redundancy were areas which we really needed to focus on (as we moved to
serverless). If the RDS failed then we had SQS, if SQS failed then we had S3 backups. Our (old
platform) monthly hosting costs were over $83k, compared to under $6k (for serverless). In fact,
the cost of our ”on the night” serverless platform was $92.
Caroline Rennie
Product Lead
The FinHack Compute and Storage sessions are focused on cost optimization
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 (Save) Cost Optimization

Activities Resources
Financial and technical
Optimization Financial and Technical Optimization tools- AWS native tools and best practices for technical and
financial cost optimization

Reactive and Proactive 9 ways to Reduce your AWS Bill – best practices to cost optimization
Optimization
5 steps to establishing proactive cloud cost optimization-guide to proactive optimization approach

Technical Optimization Trusted Advisor -inspect your AWS environment, and implement technical optimization
Management recommendations
AWS Compute Optimizer-Get recommendations to optimize your use of AWS resources

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 (Plan) Planning and forecasting

Plan and set expectations for spending on cloud projects.

Activities Outcomes
Budget and forecast cloud costs dynamically Increased forecast accuracy and business predictability

Estimate cloud workload costs Faster cost-based decisions

Quantify cloud business value Prioritized projects based on expected value creation

Integrate cloud with IT financial management planning Consolidated planning across entire IT estate

By using AWS, Zynga could carefully plan, test, and develop proof of concepts
without needing to commit to long-term fixed IT assets. This resulted in reduced costs and lower
risk as it adapted to technology demands in real time, instead of relying on forecast models.

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 (Plan) Planning and forecasting

Activities Resources
Trend-based Forecasting:
Budget and forecast
cloud costs dynamically Cost Explorer Forecast - create 1/3/6 months forecast with 80% prediction interval; custom
usage forecasts
Amazon Forecast - time-series, machine learning-based service for business metrics analysis

Estimate cloud workload Usage-based Forecasting:

costs AWS Pricing Calculator - estimate cost across AWS services, including variable patterns
AWS Migration Evaluator – estimate cost of running workloads on AWS

Integrate cloud with IT AWS Budgets - set target budget; receive tracking and alerting when thresholds are met
financial management AWS Budget Reports - sends email to stakeholders regarding adherence to specified budget
planning
AWS Cost Anomaly Detection – detect and catch activities that cause cost overruns

Demand based
Cloud forecasting Build Driver-based forecasting- trend-based and demand-based forecasting
methodology blogs Improve cloud cost forecasting– improve accuracy of your cloud forecast

For summary overview, please see pages 18-19 of the AWS Cloud Financial Management Guide
© 2023, Amazon Web Services, Inc. or its Affiliates. All rights reserved.
 (Run) Cloud financial operations
Set governance to ensure expenses stay in line with budgets

Activities Outcomes
Secure executive sponsorship for a CFM function Programmatic approach to cost management

Align stakeholder understanding of cloud cost Self-sustaining cost-aware culture

Implement cloud consumption guardrails Business agility and cost governance

Evolve processes, automation and tools Continuous cost efficiency at scale

ICONLOOP has established a Task Force Team for continuous cost management and began the cost
optimization process by identifying and categorizing current resources based on tagging, user, and usage. For
the classified resources, we were able to right-size our instances and reduce our EC2 spend by 5%, and apply
AWS Reserved Instances for 36% additional overall cost reduction for steady-state workloads. This process
has already allowed us to reduce AWS cost significantly and we keep monitoring our resources through a
dashboard we built to achieve more savings.
Jinwoo Jeong
Infrastructure Team Leader

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 (Run) Cloud financial operations

Activities Resources

Cost Optimization Governance –Develop, implement, and track governance, following WAF.
Implement cloud
consumption Identity & Access Management (IAM) – Using SCP, establish permission toward least privilege to
guardrails limit types of resources allowed to be deployed, tagging policy, budget thresholds etc.
AWS Service Catalog – centrally provision and share approved AWS services
Config - monitor and enforce resource tagging, regions deployed, size/family, …

Evolve processes, QuickSight - business Intelligence dashboard providing health of cloud financial operations
automation and tools Management and Governance –collection of AWS tools for governance and compliance

Build Cost Governance using Cloud Center of Excellence (CCoE)

For summary overview, please see pages 16-17 of the AWS Cloud Financial Management Guide
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 Putting it all together:
Cloud Financial Management (CFM) aka FinOps

Measurement and Cost Planning and Cloud financial

accountability (See) optimization (Save) forecasting (Plan) operations (Run)
Implement account and Architect and design Dynamic budgeting and Executive sponsorship for
tagging strategy forecasting a CFM function
Eliminate cloud waste
Report and monitor Estimate workload costs Align stakeholder
cost and usage Choose the best purchase option understanding of cost
Quantify cloud business value
Allocate costs Evolve with new cloud offerings Implement cloud guardrails
Integrate cloud with IT financial
Measure efficiency/value KPIs management Evolve process, automation,
and tools

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 Additional Resources

AWS Cloud Financial Management Guide AWS Cloud Finance Onboarding is a

free 10 hour webinar that teaches cloud financial
Additional details on the material in this presentation
management essentials, as well as how to
implement a FinOps function.

AWS Cloud Financial Management This event is targeted at procurement and non-
tech personas who lead cloud financial
List and details of AWS CFM Services by function management in their organizations.

Registration for March 15-16, 2023 event (in

AWS Cost Management Ramp-Up Guide European-friendly time) here

List of AWS CFM tutorials AWS Cloud Economics team will conduct a series
of these webinars in North/South American-
friendly time beginning in Q2 2023. If you want
to be informed of when those are scheduled,
please send a request to:
aws-pe-finhack@amazon.com

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